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10 things to avoid when looking for partners

Starting a business partnership is an exciting venture – it’s exhilarating and promising like nothing else. But what happens when the good vibes fade and reality sets in? If you’re like many hopeful business owners, without proper planning and execution you may find yourself with a not-so-ideal partner who ends up hurting your company instead of launching it to the stars.

Here are 10 things to avoid when you’re looking for the ideal business partner.

1. Not Doing Your Research

Just as not knowing the market well enough will inevitably cause a startup to fail, not putting in the time to see what your company needs will not help you find business partners. You must do whatever it takes to be able to accurately view the strengths and weaknesses of your company and find someone who can rise to the challenge.

Business Know-How guru Karin Schaff recommends talking to coworkers and management in your company to see the kinds of needs you and a partner should be fulfilling. Don’t leave any department overlooked – everyone from finance to marketing has valuable input to contribute.

Schaff drives home her point with this solid advice: “Don’t determine what or who will make a good partner in a vacuum. Partner relationships need corporate-wide support to make them work.” You have to find someone who will play well with your team.

2. Not Having Clearly-Defined Roles

While having a business partner in essence means dividing the responsibility of business ownership, splitting that ownership 50/50 may not be the best idea.

If control of a partnership is split exactly down the middle, many times tough decisions are made even harder because there isn’t a clear leader between partners. Entrepreneur Brad Sugars suggests splitting the balance 60/40 or 70/30. This will enable decisions to be made more quickly and efficiently, and then “you and the business have a point person for accountability and overall operational control.”

Even if control of the company is weighted more towards one partner, not assigning clear roles can have extremely counterproductive results.

Writer Anne Field notes that not having these distinct roles can erode trust in the long-term, simply because communication between partners is assumed rather than clearly communicated.

3. Not Having a Money Plan

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Having a money plan is essential. Business trainer Bill Painter outlines several questions to help you succeed with your money plans. How will the profits be divided? How will each of you be compensated for your contributions? How much money will each of you put into the business?

You must have answers to questions like these before rushing into a business partnership. Figuring out the answers as you go is a sure way to a partnership failure.

4. Not Having Similar Long-Term Goals

In the beginning, short-term goals may drive your company. But the glory of shared success can sometimes blind business partners to their long-term needs, and you must have an agreed-upon master plan in place for the long haul.

Differences in goals can be subtle, like what niche the partner would like to tap into, or more extreme, like the vision for your company. If you want to turn your company into a local powerhouse that will bring you wealth and prosperity but your partner only wants a 9-5 job, chances are your business will suffer because of these mismatched long-term goals.

Field suggests mapping out long-term goals early and often in a partnership so that you will always know where your partner stands.

5. Not Sharing the Same Vision

This is similar to not sharing long-term goals, but it’s even more crucial to the success of your business. Sharing the same vision means having the same idea about the overall direction of your company.

Rather than being defined in particular goals, sharing a vision means both you and your partner want your business meet a certain need. If one of you wants to make mortar and the other wants to build roofs, your vision is different even if they both pertain to construction.

Jennifer Utz, Vice President of Buzz Marketing at Marriott International, suggests one of the most important things you and your business partner can share is similar values. You may disagree on how money is spent and how to solve particular issues facing your business, but the manner in which you conduct yourselves and the purpose of your business aims must coincide for success.

6. Not Defining an Exit Strategy

It may sound crazy to think of a way out of your partnership before it even begins, but that is exactly what you should do as a savvy businessperson. Having disagreements with your business partner is inevitable, and if during these disagreements you find that your visions are no longer the same, you had better have an exit strategy.

Brad Sugars uses the marriage analogy of prenuptials to suggest that you should calculate what exactly each partner has brought to the table and what each partner would be leaving with should the partnership fail. Simply put, you and your business partner are forming a special relationship, and if broken, a backup plan is in order.

If an exit strategy still feels like you’re expecting failure, consider the advice of legal writer Stephen Fumari, who perhaps frames it best: “Consider it staying prepared for your next opportunity.” You should always protect your assets with a backup plan.

7. Not Putting Everything in Writing

You’ve heard the saying before: if it isn’t in writing, it doesn’t exist. Draw up the terms of your business, your goals, and each partner’s responsibility to the company. Not putting your business plans in writing only opens the door for later discrepancies and arguments. If you have a clear-cut plan written down, no amount of finagling will be able to change what is already set in stone.

A pitfall with this idea is assuming too much. You must put everything in writing, no matter how trivial it may seem at the time. You may assume you and your partner will want to have weekly progress meetings, but ten years later in different circumstances, a binding contract may be all that’s keeping you and your partner from communicating every 30 days.

“Give the document to a disinterested party to find poorly-defined terms,” suggests business expert Matt Bodnar. This will add an unbiased perspective and help you identify what you’ve forgotten to spell out explicitly on paper.

8. Finding a Partner Instead of Hiring an Employee

No matter how tough times are for your business, never make a partnership with someone whom you should simply hire instead. While it may seem like a good tradeoff in the beginning, with your “partner” working essentially for free until profits arrive, sharing that much power with someone you lowered the bar to partner with can only end in disaster.

For several of the reasons shared above, partnering instead of hiring will cause you to lose in the long run. Chances are high that this partner does not share the same long-term goals as you do, and if you only need someone to fill in the gaps you’re too busy to fill, you need to fork over the money to pay that person as an employee instead of as a partner in your lifelong pursuits.

Sugars puts it simply: “Don’t give away what you don’t have to.”

9. Not Protecting Intellectual Property

In your partnership, if one of you has the brilliant idea and the other one drives the business, you must protect your intellectual property from outside competition and from a potential failed partnership.

Entrepreneur recommends nondisclosure agreements be a key part of your business partnership. This will ensure that everyone’s intellectual property is protected, and can be legally enforced. Their business partner article quips, “If you can't talk about it, you shouldn't be doing it. A contract documents the trust that is already in place and ensures everyone abides by it.”

This may go a long way toward protecting you and your partner’s friendship, as well.

10. A Lack of Diversity

Having a like-minded partner is essential for success, but if you and your partner think exactly the same way about everything, you aren’t tapping into the potential you could be by adding some fresh perspective. Seeking business partner qualities that complement your own will help grow your business exponentially.

Accountant writer Mayeer Pearl suggests, “It might be more strategic to partner with someone who has different skills and interests; someone who can fill the gaps where you are perhaps lacking.” This can only provide a more well-rounded leadership experience for your employees.

Writers Rodd Wagner and Gale Muller weigh in on this topic , saying, “Sometimes what's required is the difference in how the two of you think or act. One consistently sees the potential; the other routinely sees the risks. One generates ideas; the other puts them into production. One is good with technology; the other is good with people.”

The challenge is to strike a balance between complementary skills and a lack of teamwork. You and your partner must still have enough in common to drive your company forward fluidly and creatively.

What other advice did you find helpful when searching for a business partner? Let us know in the comments below:

Images: Pixabay, Pixabay

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